KUALA LUMPUR, Nov 12 — Sabah’s claim for decades of unpaid “Lost Years” payments could still be affected despite the federal government’s decision not to challenge the High Court ruling affirming the state’s constitutional right to 40 per cent of federal revenue collected from it, a lawyer has warned.
Datuk Roger Chin, immediate past president of the Sabah Law Society, said the state’s effort to recover the arrears may be affected as Putrajaya still intends to appeal parts of the judgment.
“While the federal government’s acceptance of Sabah’s 40 per cent right is a step in the right direction, it should be received with cautious optimism,” Chin said in a statement today.
“It marks an important step forward, signalling that Putrajaya now accepts Sabah’s constitutional right to the 40 per cent special grant — a safeguard entrenched at the formation of Malaysia.”
Chin said the parts of the judgment that will be contested were as they could determine previous non-compliance and non-payment, crucial for the “Lost Years”, would be handled.
Under Article 112C and the Tenth Schedule of the Federal Constitution, Sabah is entitled to 40 per cent of federal revenue derived from the state, known as the “special grant”.
Article 112D further requires the federal and state governments to periodically review the amount of this grant.
The High Court had ruled that no review was conducted between 1974 and 2021, during which the federal government continued paying a fixed sum of RM26.7 million annually. This 48-year period was referred to as the “Lost Years”.
Although the federal government issued new review orders in 2022, 2023 and August 2025, the court found them invalid as they did not account for the “Lost Years”, and quashed the reviews.
The court also declared that the federal government breached its constitutional duty by failing to conduct proper reviews since 1974, ordering it to determine what Sabah should have received during the Lost Years.
The Attorney General’s Chambers (AGC) said yesterday it would appeal certain parts of the judgment it considered defective, particularly the findings of abuse of power and breach of constitutional duty, as well as the invalidation of the 2021 onwards reviews.
However, the AGC confirmed that the federal government would not appeal the recognition of Sabah’s 40 per cent entitlement and would begin negotiations with the state government immediately.
What could happen next
Chin said the AGC’s plan to only partially appeal means Sabah’s constitutional right to the 40 per cent revenue remains intact, and the federal government still has a duty to commence the review process.
He added that Putrajaya’s readiness to start negotiations indicates its acceptance of the High Court’s directive to carry out the review.
However, Chin cautioned that the federal government’s appeal could still affect the outcome, depending on how the court rules.
If the appeal fails, the federal government would still have to pay Sabah for the “Lost Years.”
If the appeal succeeds and the review orders from 2022, 2023 and 2025 are restored, these could lawfully modify the 40 per cent amount Sabah should receive, potentially nullifying its claim to the “Lost Years.”
In that scenario, Chin said, Sabah’s constitutional right to the 40 per cent revenue would remain intact, but the arrears might no longer be payable.
Alternatively, if the appeal succeeds in setting aside the court’s declaration that the federal government acted unlawfully by failing to conduct proper reviews, it could reframe the lapse as administrative rather than constitutional.
“The delay in conducting reviews could then be viewed as an administrative lapse rather than a constitutional breach, making arrears for the Lost Years a matter for negotiation rather than a judicial entitlement,” he said.
Chin said it remains to be seen what grounds the federal government will specify in its notice of appeal, which will reveal whether “the constitutional promise to Sabah will finally be honoured in full, not just in words.”